2024 MID-TERM MONETARY POLICY REVIEW STATEMENT AT A GLANCE.
The Governor, on the 30th of August presented the Midterm Monetary Policy. In the budget, major take away are as noted below.
- The Liquidity Management Committee was reconstituted, with the mandate to assess the level of liquidity in the market.
- A Monetary Policy Implementation, Monitoring, and Evaluation Committee (MPIMECO) was established. The key role of MPIMECO is to keep track of the key indicators to promptly identify emerging risks and ensure timely response by the Reserve Bank.
- In his Statement, the Governor stated that ZWG currency is being embraced by businesses and accepted by the transacting public for both transactional and savings (store of value) purposes. The acceptance of the ZWG improved from 61% in April to 80% in May and 91% in June 2024.
- Interest Rate Policy – The Bank policy rate and the corresponding interest rate to be maintained at 20% and 11-25%, respectively.
- Statutory Reserves – The statutory reserves for call and demand deposits for local currency and foreign currency to be maintained at 15% and 20%, respectively, while statutory reserve requirements for savings and time deposits remain at 5% for both currencies.
- The exemption for monthly bank maintenance or service charges for accounts with a conservative daily balance of US$100 or below has been extended to Micro, Small and Medium Enterprises (MSMEs), with effect from 1 September 2024.
- Promoting Digital Transactions – Electronic transactions of less than US$10 or the ZWG equivalent, are being exempted from bank charges, with effect from 1 September 2024.
- The country is in a multicurrency environment, with all domestic transactions expected to be settled in either ZWG or foreign currency, except in cases where there are explicit exemptions to sell in US dollars. Economic agents are expected to adhere to the multicurrency system in place.
- Refinement of the Non-Negotiable Certificates of Deposits (NNCDs) for Outstanding Export Surrender and Auction Backlog Obligations – These instruments have been refined from NNCDs to tradable Government bonds.
- Liquidity Management – During the transitional period, NNCDs will continue to be used to manage liquidity. The Reserve Bank will continue to redeem the existing Gold Backed Digital Tokens (GBDT) and gold coins in the customer’s currency of choice. There will be no new issuances of these instrument.
